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AiXin Life International (AIXN)

Filed: 14 Oct 21, 5:08pm

 

Exhibit 99.5

 

AIXIN LIFE INTERNATIONAL, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF JUNE 30, 2021

 

  AIXIN LIFE INTERNATIONAL, INC.  AIXINTANG PHARMACIES  AIXIN SHANGYAN HOTEL  PRO FORMA ADJUSTMENTS    PRO FORMA COMBINED 
                  
ASSETS                      
Current Assets                      
Cash and cash equivalents $3,248,619  $80,148  $19,039  $(2,666,641) {b} $681,165 
Accounts receivable, net  -   23,968   27,163         51,131 
Accounts receivable, related party  -   -   6,020         6,020 
Other receivables and prepaid expense  33,525   90,722   105,279         229,526 
Advance to suppliers  271,130   5,238   -         276,368 
Prepayment for acquisition  4,504,418   -   -   (4,504,418) {b}  - 
Advance to related parties  199,843   -   -         199,843 
Inventory  135,066   113,541   184,739         433,346 
Total Current Assets  8,392,601   313,617   342,240   (7,171,059)    1,877,399 
Non-Current Assets                      
Property and equipment, net  57,643   5,224   309,883         372,750 
Intangible assets, net  -   -   3,213         3,213 
Security deposits  -   -   92,928         92,928 
Operating lease right-of-use assets  84,117   436,923   1,684,168         2,205,208 
Total Non-Current Assets  141,760   442,147   2,090,192   --     2,674,099 
Total Assets $8,534,361  $755,764  $2,432,432  $(7,171,059)   $4,551,498 
                       
LIABILITIES AND STOCKHOLDERS’ EQUITY                      
Current Liabilities                      
Accounts payable $39,531  $79,013  $284,498  $(363,511) {a} $39,531 
Unearned revenue  2,793   -   293,857   (293,857) {a}  2,793 
Taxes payable  239,341   -   4,138   (4,138) {a}  239,341 
Accrued liabilities and other payables  541,942   53,491   246,129   (299,620) {a}  541,942 
Loan from third parties  -   -   462,282   (462,282) {a}  - 
Operating lease liabilities - current  37,551   154,631   639,726         831,908 
Advance from related parties  3,274   1,452,597   1,427,206   (2,879,803) {a}  3,274 
Total Current Liabilities  864,432   1,739,732   3,357,836   (4,303,211)    1,658,789 
Non-Current Liabilities                      
Operating lease liabilities - noncurrent  46,566   282,292   1,044,442         1,373,300 
Total Non-Current Liabilities  46,566   282,292   1,044,442         1,373,300 
Total Liabilities  910,998   2,022,024   4,402,278   (4,303,211)    3,032,089 
Stockholders’ Equity                      
Common stock  500   -   -         500 
Additional paid in capital  11,301,535   249,399   152,207   (2,867,848) {a} {b}  8,835,293 
Statutory reserve  151,988   -   -         151,988 
Accumulated deficit  (4,496,324)  (1,460,696)  (2,033,012)        (7,990,032)
Accumulated other comprehensive income (loss)  665,664   (54,963)  (89,041)        521,660 
Total Stockholders’ Equity  7,623,363   (1,266,260)  (1,969,846)  (2,867,848)    1,519,409 
Total Liabilities and Stockholders’ Equity $8,534,361  $755,764  $2,432,432  $(7,171,059)   $4,551,498 

 

See accompanying notes to pro forma combined financial statements

 

 

 

 

AIXIN LIFE INTERNATIONAL, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

 

  AIXIN LIFE INTERNATIONAL, INC.  AIXINTANG PHARMACIES  AIXIN SHANGYAN HOTEL  PRO FORMA ADJUSTMENTS  PRO FORMA COMBINED 
                
Revenue                    
Products $253,245  $-  $-            $253,245 
Advertising  1,297,681   -   -       1,297,681 
Pharmacy revenue  -   303,000   -       303,000 
Hotel revenue  -   -   748,056       748,056 
Total revenues, net  1,550,926   303,000   748,056       2,601,982 
                     
Operating costs and expenses:                    
Cost of goods sold  160,680   215,307   -       375,987 
Hotel operating costs  -   -   1,043,851       1,043,851 
Selling expenses  93,881   283,382   74,189       451,452 
General and administrative expenses  419,921   75,224   164,038       659,183 
Stock-based compensation  185,770   -   -       185,770 
Total operating costs and expenses  860,252   573,913   1,282,078       2,716,243 
                     
Income (loss) from operations  690,674   (270,913)  (534,022)      (114,261)
                     
Non-operating income (expenses)                    
Interest income  2,489   86   21       2,596 
Other income  161   2,785   52,548       55,494 
Other expenses  (6,885)  (31)          (6,916)
Total non-operating income (expenses), net  (4,235)  2,840   52,569       51,174 
                     
Income (loss) before income tax  686,439   (268,073)  (481,453)      (63,087)
                     
Income tax expense  218,052   -           218,052 
                     
Net income (loss)  468,387   (268,073)  (481,453)      (281,139)
                     
Other comprehensive items Foreign currency translation (loss)  77,124   (11,017)  (16,604)      49,503 
                     
Comprehensive income (loss) $545,511  $(279,090) $(498,057)     $(231,636)
                     
Income (loss) per share $0.009  $-  $-      $(0.006)
                     
Weighted average shares outstanding  49,999,891   -   -       49,999,891 

 

 

See accompanying notes to pro forma combined financial statements

 

 

 

 

AIXIN LIFE INTERNATIONAL, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEAR ENDED DECEMBER 31, 2020

 

  AIXIN LIFE INTERNATIONAL, INC.  AIXINTANG PHARMACIES  AIXIN SHANGYAN HOTEL  PRO FORMA ADJUSTMENTS  PRO FORMA COMBINED 
                
Revenue                    
Products $580,712  $-  $-           $580,712 
Advertising  1,870,343   -   -       1,870,343 
Pharmacy revenue  -   1,264,427   -       1,264,427 
Hotel revenue  -   -   1,074,151       1,074,151 
Total revenues, net  2,451,055   1,264,427   1,074,151       4,789,633 
                     
Operating costs and expenses:                    
Cost of goods sold  224,675   933,081   -       1,157,756 
Hotel operating costs  -   -   1,537,307       1,537,307 
Selling expenses  244,200   435,348   116,564       796,112 
General and administrative expenses  802,556   84,359   164,466       1,051,381 
Provision for bad debts  13,624   -   22,227       35,851 
Stock-based compensation  371,540   -   -       371,540 
Total operating costs and expenses  1,656,595   1,452,788   1,840,564       4,949,947 
                     
Income (loss) from operations  794,460   (188,361)  (766,413)      (160,314)
                     
Non-operating income (expenses)                    
Interest income  537,580   120   31       537,731 
Interest expense  -   (8)  -       (8)
Other income  28,924   5,518   82,398       116,840 
Other expenses  (3,326)  (2,658)  (5,121)      (11,105)
Total non-operating income, net  563,178   2,972   77,308       643,458 
                     
Income (loss) before income tax  1,357,638   (185,389)  (689,105)      483,144 
                     
Income tax expense  340,127   28   -       340,155 
                     
Net income (loss)  1,017,511   (185,417)  (689,105)      142,989 
                     
Other comprehensive items Foreign currency translation (loss)  437,059   (62,354)  (86,642)      288,063 
                     
Comprehensive income (loss) $1,454,570  $(247,771) $(775,747)     $431,052 
                     
Income per share $0.016  $-  $-      $0.002 
                     
Weighted average shares outstanding  65,609,450   -   -       65,609,450 

 

See accompanying notes to pro forma combined financial statements

 

 

 

 

AIXIN LIFE INTERNATIONAL, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

NOTE 1 - INTRODUCTION

 

On June 2, 2021, HK Aixin International Group Co., Limited (“HK Aixin”), a wholly owned subsidiary of Aixin Life International, Inc (“Aixin Life” or the “Company”) entered into an Equity Transfer Agreement (the “Transfer Agreement”) with Quanzhong Lin, Ting Li, and Xiao Ling Li (the “Transferor”), the shareholders of Chengdu Aixintang Pharmacy Co., Ltd. and certain affiliated entities, each of which operates a pharmacy (“Aixintang Pharmacies”). Mr. Lin is the major shareholder, Chairman and President of Aixin Life. Mr. Lin also owns in excess of 95% of the outstanding equity the Aixintang Pharmacies. The remaining equity interest is owned by Ting Li and Xiao Ling Li. Pursuant to the Transfer Agreement, HK Aixin agreed to purchase all of the outstanding equity of Aixintang Pharmacies for an aggregate purchase price of RMB 34,635,845, or approximately US$5,308,257 (“Transfer Price”). The Transfer Price will be reduced by an amount equal to any amounts paid or distributed by any of the Aixintang Pharmacies to the Transferor after December 31, 2020 and increased by an amount contributed to any of the Aixintang Pharmacies by the Transferor after such date. The Transfer Price, as adjusted in accordance with this Section, is referred to as the “Adjusted Transfer Price.”

 

On May 25, 2021, Aixin Life International, Inc entered into an Equity Transfer Agreement with the two shareholders, Quanzhong Lin and Yirong Shen (the “Transferor”), of Chengdu Aixin Shangyan Hotel Management Co., Ltd (“Aixin Shangyan Hotel”). Quanzhong Lin is also the Chairman, President and major shareholder of Aixin Life. Pursuant to the Agreement (the “Hotel Purchase Agreement”), Aixin Life agreed to purchase 100% ownership of Aixin Shangyan Hotel from Mr. Lin and Ms. Shen. Eighty percent of the equity of Aixin Shangyan Hotel is owned by Mr. Lin. The balance is owned by Ms. Shen. Under the terms of the Hotel Purchase Agreement, Aixin Life agreed to purchase all of the outstanding equity of Aixin Shangyan Hotel for a purchase price of RMB 7,598,887, or approximately $1,164,598, (“Transfer Price”). The Transfer Price will be reduced by an amount equal to any amounts paid or distributed by Aixin Shangyan Hotel to Mr. Lin or Ms. Shen after December 31, 2020 and will be increased by an amount equal to any amounts they contributed to Aixin Shangyan Hotel after December 31, 2020. The Transfer Price, as adjusted in accordance with this Section, is referred to as the “Adjusted Transfer Price.”

 

NOTE 2 - BASIS OF PRESENTATION

 

The unaudited pro forma condensed combined balance sheet as of June 30, 2021 combines the historical balance sheets of Aixin Life, Aixintang Pharmacies, and Aixin Shangyan Hotel as if the Transactions had occurred on June 30, 2021. The unaudited pro forma combined statements of operations and comprehensive loss for the six months ended June 30, 2021 and for the year ended December 31, 2020 combine the historical consolidated statements of operations and comprehensive income (loss) of Aixin Life, Aixintang Pharmacies, and Aixin Shangyan Hotel, and have been prepared as if the Transactions had closed on January 1, 2020, respectively. The unaudited pro forma condensed combined financial statements have also been adjusted to give effect to pro forma events that are directly attributable to the Transactions, factually supportable and expected to have a continuing impact on the combined results.

 

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Aixin Life, Aixintang Pharmacies, and Aixin Shangyan Hotel are under common control and ownership.

 

The preliminary unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the consolidated results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

 

NOTE 3 – PRO FORMA ADJUSTMENTS

 

The following adjustments were made in the preparation of the unaudited pro forma condensed consolidated combined balance sheet and unaudited pro forma condensed consolidated combined statements of income and comprehensive income:

 

{a} Pursuant to the Transfer Agreement and Hotel Purchase Agreement, the actual or potential creditor’s rights and debts of Aixintang Pharmacies and Aixin Shangyan Hotel prior to the date of equity transfer shall be owned and undertaken by the Transferor. After the transfer, the Transferor shall independently assume the liability for litigations or losses of Aixintang Pharmacies and Aixin Shangyan Hotel caused by the actual or potential debts prior to the date of equity transfer.

 

{b} Represents the proceeds made by Aixin Life based on the Adjusted Transfer Price. The Adjusted Transfer Price is based on the Transfer Price of $5,308,257, increased by $332,377 contributed to Aixintang Pharmacies by Mr. Lin during the six months ended June 30, 2021, and the Transfer Price of $1,164,598, increased by $365,827 contributed to Aixin Shangyan Hotel by Mr. Lin during the six months ended June 30, 2021. As of June 30, 2021, these two acquisitions have not yet been completed, and Aixin Life prepaid $4,504,418 for the acquisition price.